Prime Minister Benjamin Netanyahu has asserted Israel's "right to build" in Jerusalem, following a row with the US over plans for new homes in the city.

US Secretary of State Hillary Clinton says Israel has to make "difficult" choices for peace.

The Palestinian Authority is furious at Israel's insistence on building on occupied territory. It sees it as a serious stumbling block to the resumption of talks, which have been stalled for more than a year.

Some 500,000 Jews live in more than 100 settlements built since Israel's 1967 occupation of the West Bank and East Jerusalem. They are considered illegal under international law, which Israel disputes.

George Alagiah spoke to the Mayor of Jerusalem, Nir Barkat, who insists that a freeze on settlement building is unacceptable to Israel.

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